Carlos Tavares, now former CEO of Stellantis, had disagreements with the company’s board of directors regarding his approach to revitalizing the automotive group, which was in extreme difficulty in 2024. According to sources close to the company’s internal developments, Tavares, who had earned a solid reputation for his leadership ability and pragmatic approach, decided to focus predominantly on cost-reduction initiatives rather than investing in a long-term strategy that could ensure sustainable growth and solid positioning for the future.
Disagreements between Carlos Tavares and the board of directors over the Portuguese manager’s management style
This shift in focus, centered on short-term and immediate financial measures, fueled growing disagreement between the CEO and Stellantis’ board of directors, which expected a vision more oriented toward transformation and innovation to address the challenges of the automotive sector in an increasingly competitive and evolving context. This difference in views exacerbated the tension between the two parties, ultimately culminating in Tavares‘ sudden resignation.
According to Reuters, several shareholders and analysts familiar with the situation indicated that Tavares’ focus on cost reduction was not well received. “The board was concerned that his emphasis on cost-cutting was leading to quality issues, potentially limiting Stellantis’ ability to innovate and produce new models,” said one shareholder. Tavares‘ approach, although aimed at quick solutions, was seen as neglecting the importance of investing in future products and maintaining brand integrity, which alienated both customers and dealers.
The biggest concern remains the North American market, due to an inventory of more than 300,000 vehicles and increased competition from Chinese manufacturers, particularly in the electric vehicle (EV) sector. At the same time, Stellantis has had to struggle to adapt its pricing strategy in Europe, where inflation has impacted consumer purchasing power.
The cost-reduction measures adopted by Carlos Tavares had a negative and targeted impact on his relationships with U.S. dealers and the United Auto Workers (UAW) union. In September, Kevin Farrish, president of Stellantis’ National Dealer Council, raised concerns in a letter addressed to Tavares, noting that the approach focused on short-term profits had led to a “rapid degradation” of brands such as Chrysler, Dodge, Jeep, and Ram.
The UAW also expressed its frustration regarding delays in investment plans by Stellantis, threatening to take strike action as a form of protest. Tensions within the company increased further when the board of directors began expressing disapproval of Tavares’ approach to emissions regulations in Europe.
Despite these difficulties, Tavares maintained a firm position in wanting to respect the ambitious emissions targets imposed by the European Union, a commitment that alienated some investors. The latter feared that the company could encounter serious difficulties in achieving these targets, especially in a market context where demand for electric vehicles was declining.
Carlos Tavares’ resignation, announced unexpectedly, caused Stellantis shares to fall by up to 10%, their lowest point since July 2022. Despite Carlos Tavares’ departure, analysts believe that Stellantis’ challenges are far from over. “The problems are deep and not easy to solve,” said Stephen Reitman, an analyst at Bernstein. The automotive giant faces a tough battle to get back on its feet, and its next CEO will need to find a balance between cost management and long-term growth to turn things around.